February 23, 2012
CSD: Healthy Options Mean Healthy Business
Through a special arrangement, presented here for discussion is a summary of an article from Convenience Store Decisions magazine.
While some c-store operators are gingerly testing the waters of healthy lunch and dinner solutions, others have plunged right in as the tide of consumer demand moves steadily toward fresher fare.
With the opening of its latest store in Marshfield, MA, Tedeschi Food Shops launched a new initiative that puts healthful meal and snack options "front and center," said Bob Goodwin, the company’s director of fresh foods.
Among the prominent features are walk-around refrigerated cases at the entrance, full deli with a rotisserie chicken unit on display and a self-service soup station.
"Instead of just a place to pick up a pack of cigarettes, we want customers to think of us as a neighborhood mini fresh store, an alternative to the supermarkets, where they can find fresh meats and produce as well our signature bake-at-home pizzas and immediate consumption foodservice options," Mr. Goodwin said.
But Michael Davis, vice president of member services for NACS (National Association of Convenience Stores), believes that in reality, a sizable number of consumers "still talk thin and eat fat" and view c-stores as ‘America’s Cookie Jar.’"
David Morris, a foodservice consultant for Packaged Facts, said another hurdle is that c-store purchases are generally driven by impulse for immediate satisfaction rather than long-term health considerations.
Still, Mr. Morris believes "major media exposure and government educational efforts are resulting in an increasing enlightenment among consumers of the importance of eating healthfully" and a number of c-stores are prominently featuring items that resonate as healthful to consumers.
At Thorntons, getting customers to view the stores as a source of "healthful" meals and snacks has proven to be a challenge, said Melina Patterson, senior category manager of fresh foods for the 165-unit Midwest chain.
"We believed that starting with fresh produce would have the most immediate impact," Ms. Patterson said. "So we increased our SKUs of whole and cut fresh fruits and vegetables from five to 10 and displayed them in our most highly-trafficked area between the front door and the check-out."
While these healthful selections did not immediately fly out the door, "we noticed the entire store presentation felt different and we think our customers started picking up on it, too. Through intercepts, we found that many of them recall that we have healthy options."
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Discussion Questions
Discussion Questions: What hurdles do you think c-stores face in chasing the healthy and fresh opportunity? What will it take for c-stores to overcome its “America’s Cookie Jar” reputation?
Poll
I’m just not sure the economics are there right now.
Part of creating a “fresh” image is having depth of inventory, serious product rotation and — frankly — an absence of unhealthy opportunities. Also there is that whole “convenience” issue. Are Americans really looking for another pizza they can bake at home, or are they in immediate need of a slice? Ten SKUs of produce do not, in and of themselves, make a screaming statement. It’s more like the inventory equivalent of clearing your throat.
I salute the impulse and I’m sure that, over time, these “fresh” items — I’m really not sure how many rotisserie chickens are actually “fresh” by the time a customer eats them — will catch on with some percentage of customers. The bottom line though is still the bottom line. Are most c-stores willing to tie up that valuable inventory space for a year, or two, or three until the market comes around?
Now before I get bombarded by a series of local examples, let me say that I live a mile or so away from a gas station whose foodservice offerings include complete Middle Eastern takeout meals which are delicious, so it’s obvious fresh CAN work.
Kwik Trip (here in Wisconsin) seems to be following a strategy similar to Thorntons … add more fresh produce and freshly prepared foods, and tell the story through more aggressive marketing. The smart C-store operator will view his real estate as an opportunity to take share from larger grocers as well as newer concepts such as Fresh Market and the small-format Whole Foods stores. Will this change consumer perceptions about C-stores overnight? No, but it’s a healthy start.
Convenience stores definitely have a reputation: pop in to grab a quick takeaway snack, which is usually a guilty pleasure. But does it have to be this way? Retailers can always strive to revive their storefronts and product inventory to offer something new. In this case, Tedeschi still carries the products it always has, but has amplified the offer by adding healthier options to open up to a new market.
The two major hurdles are price and time-consumption. The healthy products can’t be too expensive, which produce tends to be, and they need to be visible to people who aren’t really looking for a ‘shopping experience’ like they may at their local grocery store.
The c-stores, because of their shoppers’ habits, need to ensure they carry the right types of health products. A bag of chips is easy to eat; a salad takes a little more effort. But it can 100% be done, and I’m proud to see c-stores taking on a healthier approach.
It is tough to change consumers’ habits, especially when real “healthy” options do cost more to prepare. The 2/$1 hot dogs and 44 oz. Big Gulp pop for $.79 are staples in convenience stores. Now try selling a multi-grain premium sandwich using high-end lunch meats or albacore tuna, and you have a new way of trying to extract more money out of very thin wallets.
It is a tough choice to make, but you could do both. Keep the traditional grub, and start slowly by sampling higher-end healthy options, to slowly win over the health conscious folks who might ante up to the higher-end selections. I don’t see a tremendous wave of customers changing their habits anytime soon, until the economy changes for the better, but don’t stop trying to pick off the consumers who will pay more.
C-stores are generally higher priced, and sell such things as beer, cigarettes, and lotto tickets. They are catering to the uneducated who tend to buy such products. Healthful products are geared toward more educated and higher income consumers who are more mindful of how they spend their dollars. So the hurdle is to get a better class of consumer in the store. I think C-stores can accomplish that by being located in higher income areas, being priced right, and downplaying the liquor, lotto, and cigarettes more.
I’m not sure what the answer is, but it sure is disappointing to see the offerings of the industry leader — 7-Eleven — at least here in Florida. Our Mobil “On the Run” recently converted to a 7-Eleven. The process took a year and the food offerings went downhill, which I would not have thought possible.
7-Eleven here seems mainly intent on pushing high volumes of cigarettes and cold beer (even in the morning!) and the unhealthiest of snacks. The only positive change has been a faint nod to produce, with a small display of over-ripe items. The salad and sandwich offerings are all pre-packaged, pre-made, and unappetizing. And, to top it off, they replaced many branded snacks with 7-Eleven “equivalents.” If I’m going to eat unhealthy stuff, I want the real thing — like Krispy Kreme donuts!
Having a variety of healthy options available and keeping them fresh involves a huge effort by c-stores. To make the effort profitable sales of the fresh items needs to be brisk and consistent. For this to happen, the fresh and healthy food needs to be attractive and available at reasonable prices. It can work. Will it work? As with so many other things, it depends upon the execution.
This reminds me again of the expression “walk the walk and talk the talk.” It appears this company is attempting to do both. I wonder how long they can maintain it when the profit line is not there. I admit that when I do, on a rare occasion, go into the C-store, I am looking for the “cookie jar” stuff, not the healthy stuff. I leave that for my wife to bring home from the traditional grocery store.
This project is going to take a long time to reap benefits. consumer habits do not change overnight. Nor does their concept of what a C-store is.
C-stores face the same challenge as fast-food restaurants, vending, etc. Their role is to satisfy consumers’ need for on-the-go satisfaction. Historically that satisfaction has equated to indulgence — or at least a familiar taste.
To change that paradigm, C-stores actually may have an advantage. Much of the C-store food purchase is driven by impulse. And while we have come to equate “impulse” with “indulgence” it doesn’t necessarily have to be that way.
Other forms of impulse satisfaction such as those offered by Thorntons, Wawa, Sheetz and others will take hold as U.S. attitudes toward eating evolve, and they will. The creation of a “fresh food feel” in the store merchandising can and will help. Show me a fresh turkey and cheese croissant instead of a cheeseburger and I’m probably going to go for it. Wouldn’t have happened ten years ago, though.
Well, it’s interesting to me that you asked the question the way you did, because I recently had a run-in with a Fresh & Easy, and I find myself contrasting it to TESCO Expresses in the UK. TESCO Express, it seems to me, is what these healthier option c-stores are trying to be. Ironically, that’s not what a Fresh & Easy is, though. So why is it that TESCO can figure out c-store in the UK so well, but attempted and is not really succeeding (certainly not to external expectations) at the grocery store model in the US? And yet, c-stores are trying to be what Express is in the UK. Why didn’t TESCO try to take on that model, rather than the grocery model?
I think consumers don’t want to really have to think about all this stuff. There are so many conflicting reports about what’s good for you and what isn’t, what helps you lose weight and what doesn’t, I personally believe a lot of people just throw up their hands and eat what they want. However, if the healthy options work that grocery stores are doing around rating their products, then consumers are going to get trained what to look for when they reach for the shelf. And that might make for a good opportunity for c-stores to glom on to that and use it to help change their own image.
Providing and promoting are two very different market approaches. Convenience stores must look at inventory margins as a means of determining location of products. It is no secret that healthier foods cost more and must be price competitive with the more popular same product line. This yielding of scant margins gives the retailer little choice but to promote the higher margin yielding products while providing the healthier choice. A lot of people go into the store wanting a granola bar, but due to time constraints settle for a candy bar rather than hunt for the healthier choice. Thus this is a vendor issue and must be resolved by them as in renting preferred store locations for their products.
The hurdle is local store merchandising/marketing matched to the demographics of each store within the chain. You could invest floor space for fresh fruit and ready-to-eat salads at locations that are embedded within the neighborhood and by definition are “convenient” to get in/get out. Does healthy and fresh make economic sense for stores that are on airport pads or along major highways? No. Giving loyal customers new categories to purchase, leveraging this new fresh and healthy product expansion as “new news” in their street level signage and window displays will draw in traffic — new store visitors and c-store loyalists.
The biggest hurdle that c-stores face is that they are late to the party (a party that should have been their big bash). Walgreen, Walmart, Target, Whole Foods, and others have jumped on the small format, healthy-take-and-go bandwagon. Walgreen, Giant Eagle and Kroger are among retailers that have one-upped c-stores by layering on alternative fueling (electric) options that position them as green-friendly and alert to urban opportunities.
Forcing fruits and veggies into the mix and expecting an “immediate impact” is a me-too misfire at this stage of the game. Why the late response?
The real question is this: are patrons of c-stores really looking for healthy and fresh food options?
The honest answer is no. Most of these customers are looking for beer, soft drinks, chips, hot dogs, beef jerky, ice cream, candy, cigarettes and lotto tickets. It’s nice that c-store operators are testing healthy alternatives, and maybe some customers with the munchies at midnight will opt for apple slices and yogurt. But I just don’t see it working unless the customer profile changes.
Even with as much press as health/wellness/nutrition get here in the US, the vast majority of us still consume far greater quantities of unhealthy foods, often purchased at C-stores, than we eat healthy foods. Fresh, healthy foods are more of a financial risk for the C-stores if the products are not generating the sales velocity required to maintain freshness in-store. The risk may be too much for most C-stores to take on if the majority of customers avoid those items.
Like all retailers, c-stores are simply reflecting what their customers want. If the customer wants healthy foods, they will start to purchase these. If not, they will continue to purchase less-healthy choices. Just like America’s restaurants, these businesses have evolved to reflect the demands of their consumers. Their reputations reflect these needs.
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I’m just not sure the economics are there right now.
Part of creating a “fresh” image is having depth of inventory, serious product rotation and — frankly — an absence of unhealthy opportunities. Also there is that whole “convenience” issue. Are Americans really looking for another pizza they can bake at home, or are they in immediate need of a slice? Ten SKUs of produce do not, in and of themselves, make a screaming statement. It’s more like the inventory equivalent of clearing your throat.
I salute the impulse and I’m sure that, over time, these “fresh” items — I’m really not sure how many rotisserie chickens are actually “fresh” by the time a customer eats them — will catch on with some percentage of customers. The bottom line though is still the bottom line. Are most c-stores willing to tie up that valuable inventory space for a year, or two, or three until the market comes around?
Now before I get bombarded by a series of local examples, let me say that I live a mile or so away from a gas station whose foodservice offerings include complete Middle Eastern takeout meals which are delicious, so it’s obvious fresh CAN work.
Kwik Trip (here in Wisconsin) seems to be following a strategy similar to Thorntons … add more fresh produce and freshly prepared foods, and tell the story through more aggressive marketing. The smart C-store operator will view his real estate as an opportunity to take share from larger grocers as well as newer concepts such as Fresh Market and the small-format Whole Foods stores. Will this change consumer perceptions about C-stores overnight? No, but it’s a healthy start.
Convenience stores definitely have a reputation: pop in to grab a quick takeaway snack, which is usually a guilty pleasure. But does it have to be this way? Retailers can always strive to revive their storefronts and product inventory to offer something new. In this case, Tedeschi still carries the products it always has, but has amplified the offer by adding healthier options to open up to a new market.
The two major hurdles are price and time-consumption. The healthy products can’t be too expensive, which produce tends to be, and they need to be visible to people who aren’t really looking for a ‘shopping experience’ like they may at their local grocery store.
The c-stores, because of their shoppers’ habits, need to ensure they carry the right types of health products. A bag of chips is easy to eat; a salad takes a little more effort. But it can 100% be done, and I’m proud to see c-stores taking on a healthier approach.
It is tough to change consumers’ habits, especially when real “healthy” options do cost more to prepare. The 2/$1 hot dogs and 44 oz. Big Gulp pop for $.79 are staples in convenience stores. Now try selling a multi-grain premium sandwich using high-end lunch meats or albacore tuna, and you have a new way of trying to extract more money out of very thin wallets.
It is a tough choice to make, but you could do both. Keep the traditional grub, and start slowly by sampling higher-end healthy options, to slowly win over the health conscious folks who might ante up to the higher-end selections. I don’t see a tremendous wave of customers changing their habits anytime soon, until the economy changes for the better, but don’t stop trying to pick off the consumers who will pay more.
C-stores are generally higher priced, and sell such things as beer, cigarettes, and lotto tickets. They are catering to the uneducated who tend to buy such products. Healthful products are geared toward more educated and higher income consumers who are more mindful of how they spend their dollars. So the hurdle is to get a better class of consumer in the store. I think C-stores can accomplish that by being located in higher income areas, being priced right, and downplaying the liquor, lotto, and cigarettes more.
I’m not sure what the answer is, but it sure is disappointing to see the offerings of the industry leader — 7-Eleven — at least here in Florida. Our Mobil “On the Run” recently converted to a 7-Eleven. The process took a year and the food offerings went downhill, which I would not have thought possible.
7-Eleven here seems mainly intent on pushing high volumes of cigarettes and cold beer (even in the morning!) and the unhealthiest of snacks. The only positive change has been a faint nod to produce, with a small display of over-ripe items. The salad and sandwich offerings are all pre-packaged, pre-made, and unappetizing. And, to top it off, they replaced many branded snacks with 7-Eleven “equivalents.” If I’m going to eat unhealthy stuff, I want the real thing — like Krispy Kreme donuts!
Having a variety of healthy options available and keeping them fresh involves a huge effort by c-stores. To make the effort profitable sales of the fresh items needs to be brisk and consistent. For this to happen, the fresh and healthy food needs to be attractive and available at reasonable prices. It can work. Will it work? As with so many other things, it depends upon the execution.
This reminds me again of the expression “walk the walk and talk the talk.” It appears this company is attempting to do both. I wonder how long they can maintain it when the profit line is not there. I admit that when I do, on a rare occasion, go into the C-store, I am looking for the “cookie jar” stuff, not the healthy stuff. I leave that for my wife to bring home from the traditional grocery store.
This project is going to take a long time to reap benefits. consumer habits do not change overnight. Nor does their concept of what a C-store is.
C-stores face the same challenge as fast-food restaurants, vending, etc. Their role is to satisfy consumers’ need for on-the-go satisfaction. Historically that satisfaction has equated to indulgence — or at least a familiar taste.
To change that paradigm, C-stores actually may have an advantage. Much of the C-store food purchase is driven by impulse. And while we have come to equate “impulse” with “indulgence” it doesn’t necessarily have to be that way.
Other forms of impulse satisfaction such as those offered by Thorntons, Wawa, Sheetz and others will take hold as U.S. attitudes toward eating evolve, and they will. The creation of a “fresh food feel” in the store merchandising can and will help. Show me a fresh turkey and cheese croissant instead of a cheeseburger and I’m probably going to go for it. Wouldn’t have happened ten years ago, though.
Well, it’s interesting to me that you asked the question the way you did, because I recently had a run-in with a Fresh & Easy, and I find myself contrasting it to TESCO Expresses in the UK. TESCO Express, it seems to me, is what these healthier option c-stores are trying to be. Ironically, that’s not what a Fresh & Easy is, though. So why is it that TESCO can figure out c-store in the UK so well, but attempted and is not really succeeding (certainly not to external expectations) at the grocery store model in the US? And yet, c-stores are trying to be what Express is in the UK. Why didn’t TESCO try to take on that model, rather than the grocery model?
I think consumers don’t want to really have to think about all this stuff. There are so many conflicting reports about what’s good for you and what isn’t, what helps you lose weight and what doesn’t, I personally believe a lot of people just throw up their hands and eat what they want. However, if the healthy options work that grocery stores are doing around rating their products, then consumers are going to get trained what to look for when they reach for the shelf. And that might make for a good opportunity for c-stores to glom on to that and use it to help change their own image.
Providing and promoting are two very different market approaches. Convenience stores must look at inventory margins as a means of determining location of products. It is no secret that healthier foods cost more and must be price competitive with the more popular same product line. This yielding of scant margins gives the retailer little choice but to promote the higher margin yielding products while providing the healthier choice. A lot of people go into the store wanting a granola bar, but due to time constraints settle for a candy bar rather than hunt for the healthier choice. Thus this is a vendor issue and must be resolved by them as in renting preferred store locations for their products.
The hurdle is local store merchandising/marketing matched to the demographics of each store within the chain. You could invest floor space for fresh fruit and ready-to-eat salads at locations that are embedded within the neighborhood and by definition are “convenient” to get in/get out. Does healthy and fresh make economic sense for stores that are on airport pads or along major highways? No. Giving loyal customers new categories to purchase, leveraging this new fresh and healthy product expansion as “new news” in their street level signage and window displays will draw in traffic — new store visitors and c-store loyalists.
The biggest hurdle that c-stores face is that they are late to the party (a party that should have been their big bash). Walgreen, Walmart, Target, Whole Foods, and others have jumped on the small format, healthy-take-and-go bandwagon. Walgreen, Giant Eagle and Kroger are among retailers that have one-upped c-stores by layering on alternative fueling (electric) options that position them as green-friendly and alert to urban opportunities.
Forcing fruits and veggies into the mix and expecting an “immediate impact” is a me-too misfire at this stage of the game. Why the late response?
The real question is this: are patrons of c-stores really looking for healthy and fresh food options?
The honest answer is no. Most of these customers are looking for beer, soft drinks, chips, hot dogs, beef jerky, ice cream, candy, cigarettes and lotto tickets. It’s nice that c-store operators are testing healthy alternatives, and maybe some customers with the munchies at midnight will opt for apple slices and yogurt. But I just don’t see it working unless the customer profile changes.
Even with as much press as health/wellness/nutrition get here in the US, the vast majority of us still consume far greater quantities of unhealthy foods, often purchased at C-stores, than we eat healthy foods. Fresh, healthy foods are more of a financial risk for the C-stores if the products are not generating the sales velocity required to maintain freshness in-store. The risk may be too much for most C-stores to take on if the majority of customers avoid those items.
Like all retailers, c-stores are simply reflecting what their customers want. If the customer wants healthy foods, they will start to purchase these. If not, they will continue to purchase less-healthy choices. Just like America’s restaurants, these businesses have evolved to reflect the demands of their consumers. Their reputations reflect these needs.